Last week's merger deal between Ryland and Standard Pacific was the first big deal since Pulte purchased Centex in 2009, but it could be a sign of things to come as homebuilders look to stock up assets to take advantage of the housing recovery.

Look to smaller, newly public players as spots for deals, say analysts, pointing to Tri Pointe Homes (NYSE:TPH), Taylor Morrison (NYSE:TMHC), and William Lyon (NYSE:WLH) as three whose share prices have struggled versus those of the larger builders.

Relative giants like D.R. Horton, PulteGroup, and Lennar already have a sizable presence in key markets, and are less likely to be buyers.

“We’re not going to have 22 publicly traded companies that are significant enough in size to have good liquidity," says John Burns, who heads a homebuilding research firm, predicting more consolidation in the industry.

Standard Pacific (NYSE:SPF) CEO Scott Stowell - who will be the chief of the combined company: “We’re out in front of what we think will be a wave of consolidation in our industry."

The two builders have little in the way of overlap, reports the WSJ, as each has its largest operations where the other doesn't, and Standard Pacific is an upscale homebuilder (ASP of $478K), while Ryland (NYSE:RYL) focuses on those of lower cost (ASP of $333K).